For a long period, Europe’s luxury retail market moved in unison. Growth in Paris signalled momentum in Milan. A slowdown in London was felt across the continent. Sales, rents, and expansion broadly followed the same trajectory.
That coherence is now giving way to a more fragmented and less predictable market environment.
Cushman & Wakefield’s European Luxury Retail Report 2026 highlights the extent of this shift. At a headline level, the market appears stable. Luxury retail sales grew by just 0.5% in 2025, reflecting a more cautious consumer environment.
At the same time, underlying dynamics point in different directions. The European luxury retail market is not slowing in a conventional sense — it is fragmenting, both geographically and structurally.
A Continent Out of Sync
The most visible form of divergence is geographic.
Paris, Milan, and London remain the core of European luxury retail. Their importance is unchanged. Paris, in particular, saw a strong rebound in 2025, with store openings accelerating sharply after a quieter year, reaffirming its position as the continent’s leading luxury market.
Milan illustrates a different dynamic. Luxury retail sales in Italy declined slightly, yet demand for space on Via Montenapoleone remains intense, with vacancy effectively at zero.
Brands continue to invest heavily in flagship redevelopments and expansions, competing for a supply of space that remains severely constrained.
London occupies a third position. While less dynamic in the short term, it is the only one of the three major markets expected to grow above the European average in the coming years, indicating a relative shift in momentum.
This does not indicate a weakening of the traditional capitals, but a shift in their role. They remain essential anchors of the market, but no longer define its overall direction.
Growth Beyond the Core
Beyond the established luxury capitals, a broader geography of growth is emerging.
Southern Europe and selected emerging markets are expected to outperform in the coming years. Spain, Portugal, and the Czech Republic are projected to see luxury retail sales growth above the European average.
These markets offer a combination of rising tourism, improving retail infrastructure, and, importantly, greater availability of suitable retail space. In a sector defined by supply constraints, this creates tangible opportunities for expansion.
This does not represent a shift in dominance, but rather an expansion of the European luxury landscape. Growth is becoming more distributed, extending beyond a small number of established locations.
Stability Without Momentum
In other markets, the dynamics are more mixed.
In Sweden, luxury retail sales declined in 2025 despite a significant increase in international tourism, indicating a more cautious consumer environment.
Germany presents a similarly balanced picture. Sales grew modestly, but tourism declined slightly, and rents in some locations remain below pre-pandemic levels.
Switzerland shows somewhat stronger performance, with rising sales and continued demand for prime retail locations. However, even here, vacancy increased in Geneva—albeit from a very low base—highlighting how sensitive these markets are to small shifts in supply.
Across these markets, stability does not necessarily translate into momentum, and growth does not always align with demand drivers such as tourism.
The City-Level Reality
It is at the level of individual cities that this fragmentation becomes most tangible.
Paris and Milan are both seeing increased activity, but for different reasons—Paris driven by renewed demand, Milan by extreme supply constraints. Brussels has experienced a decline in store openings alongside rising vacancy, reflecting a slowdown in activity.
Stockholm presents another variation, with zero vacancy but fewer store openings, suggesting a market constrained both by supply and by demand.
Amsterdam continues to perform steadily, attracting new brands and maintaining relatively strong levels of activity compared to other secondary markets.
These developments are not isolated. They reflect a broader pattern in which Europe’s luxury retail market is increasingly shaped by local conditions rather than a single, unified trend.
Performance and Presence Diverge
Alongside geographic fragmentation, a second and more structural shift is taking place.
Luxury retail is no longer behaving like a typical consumer-driven sector. The traditional relationship between sales performance and expansion activity is weakening.
Sales growth has slowed, yet store openings increased to 96 in 2025. Consumer demand has become more selective, yet prime rents continue to rise. Vacancy remains near zero across key luxury streets, regardless of short-term fluctuations in market performance.
In effect, performance and presence are increasingly decoupled.
This is one of the most significant insights of the report. Expansion decisions are no longer driven primarily by short-term sales expectations, but by longer-term strategic considerations.
Retail as Strategy, Not Response
This can be explained by the evolving role of the physical store.
As Cushman & Wakefield notes, “physical stores sit at the heart of luxury retail strategies.”
Stores are no longer viewed solely as points of sale. They function as strategic assets—supporting brand positioning, customer engagement, and long-term value creation.
A flagship location on Avenue Montaigne, Via Montenapoleone, or Bond Street is not justified purely by immediate revenue. Its importance lies in its contribution to brand visibility, identity, and global relevance.
This shift fundamentally alters how expansion decisions are made.
Am Market Defined by Scarcity
In this context, expansion is increasingly shaped by constraint.
Supply on Europe’s leading luxury streets remains extremely limited. As a result, securing space has become a strategic priority, and the absence from key locations carries increasing risk.
This is leading to a form of “defensive expansion,” where brands invest to maintain positioning rather than to capture immediate growth. When prime locations are unavailable, nearby streets and emerging clusters provide alternative opportunities, reinforcing the importance of proximity and micro-location.
At the same time, the gap between luxury and non-luxury retail continues to widen. Luxury high streets have surpassed pre-2018 rental levels and operate with minimal vacancy, while broader retail markets are still in recovery.
Luxury retail is not only outperforming—it is operating under a distinct set of market dynamics.
The New Logic of Luxury
Taken together, these dynamics point to a structural transformation:
- Europe’s luxury retail market is no longer defined by a single trajectory. It is characterised by divergence across geographies and by a decoupling of traditional market indicators.
- Growth is no longer uniform. Performance is no longer predictive. Expansion is no longer a direct response to demand.
- Instead, the market is becoming more strategic, more selective, and increasingly shaped by scarcity.
As the report concludes, “being in the right place continues to be fundamental to luxury retail success.” In a market that is both out of sync and out of step, that principle has become more critical than ever.
